Eurozone factory output inches upward

FRANKFURT, Germany, July 14 (UPI) -- The amount of goods leaving factories in 16 countries that use the euro rose in May for the first time since last August, statistics indicate.

But even with the 0.5 percent increase, Eurozone factory output remained 17 percent below the level of a year ago, the European Union's statistics office said Tuesday.

The increase also fell short of expectations, and German investors warned a comeback could be sluggish, the Financial Times said.

Higher output in Germany, France and Italy had heightened expectations among economists, who expected a 1 percent increase factory output in May. But decreases in production by Spain and smaller countries brought down the total increase in output, the Times said.

"All told, the weaker-than-expected rise on the month was something of a surprise and will damp(en) any hopes of a strong rebound in euro-area activity," Colin Ellis at Daiwa Securities told the Times.

Among German investors, expectations ebbed in June for the first time after eight straight months of gains, the Mannheim-based ZEW Centre for European Economic Research said.

ZEW's index of economic expectations fell to 39.5 points from 44.8 in May, disappointing economists who had expected the leading indicator of future trends to keep climbing, the Times reported.

Hopes rose last week on news that orders and output reported by German companies had increased in May, perhaps signaling a rebound from the recession.

Andreas Rees of Unicredit told the Times the latest ZEW figures suggest German growth would come in the second half of 2009, then slow early in 2010 as companies restock and stimulus spending ends.

German officials expressed relief last week over signs the economy had hit bottom, but Berlin predicted the economy would shrink up to 6 percent this year.